House bill would repeal health plan 'Cadillac tax'

Legislation introduced in the House of Representatives Tuesday would repeal the health care reform law's “Cadillac tax” that is to impose a 40% excise tax on group health care plan premiums exceeding $10,200 for single coverage and $27,500 for family coverage in 2018.

The tax is unfair, sponsor Rep. Joseph Courtney, D-Conn., said in a statement, and would affect areas such as the Northeast, which has the highest health care costs.

The bill, H.R. 2050, has 71 co-sponsors, including three Republicans.

“Unless repealed, this 'Cadillac tax' will eventually apply to every health plan vehicle on the road, especially damaging plans with large numbers of women, older workers and families living in areas where health services are expensive,” James Klein, president of the American Benefits Council in Washington said in a statement supporting the legislation.

The proposal's chances of gaining enactment are not known. During the legislative session that began in January, the only congressional action related to the Affordable Care Act was a House vote in January to increase the law's definition of full-time employees from those working an average of 30 hours per week to an average of 40 hours per week. The Senate has yet to consider that measure.

An earlier analysis by benefit consultant Towers Watson & Co. projected that 48% of employers with at least 5,000 employees that offer health plans could be hit by the excise tax in 2018, with 82% affected by 2023.

The tax is to be paid by insurers and third-party claims administrators, which are expected to seek reimbursement from employers.